Today in The Daily Circuit, we’re looking at ADNOC’s $18 billion takeover of German chemical company Covestro, Qatar Airways’ plan to acquire a 25% stake in Virgin Australia, a U.S. acquisition for Emirates Global Aluminum and the six Arab filmmakers hoping for Oscar fame. But first, foreign direct investment falls short of Saudi government targets.

Saudi Arabia is slipping deeper into deficit spending mode amid slowing growth in revenue from international investment and cutbacks in oil production.

Finance Ministry figures released on Monday show the kingdom’s 2024 deficit growing by almost 50% to $32 billion from projections made last December and reaching 2.9% of GDP.

The forecast buttresses earlier government statements that some of the banner construction projects it plans will have to be slowed down because of revenue shortfalls.

Saudi Arabia is having trouble meeting its goals for foreign direct investment, which at $9.7 billion was roughly the same in the first six months of 2024 as in the same period last year. The government has set a target of $100 billion in FDI annually by 2030, about three times more than its previous high.

CHEMICAL REACTION

ADNOC agreed today to buy German chemicals producer Covestro for $18 billion, one of the biggest takeovers of a foreign company by any of the Gulf states. The deal aligns with state-owned ADNOC’s plans to build up its petrochemicals business along with gas and renewable energy as the UAE to shift its economy from dependence on oil. Covestro, which makes plastics and chemicals for the automotive, construction and engineering industries, was created in 2015 after being spun off from Bayer. ADNOC has also been in talks with Austria’s OMV for more than a year to merge their petrochemical joint ventures Borealis and Borouge.

HOTEL HOTSPOT

Saudi Arabia is becoming a magnet for the hotel industry as the kingdom continues to open up for international tourism. At the Future Hospitality Summit in Dubai on Monday, Millennium Hotels and Resorts COO William Harley-Fleming told Arab News that the company is negotiating contracts to develop new properties across Saudi Arabia under 11 different brands it owns. While focusing on Riyadh, Jeddah and the Red Sea region, Millennium is also looking to build in lesser-known cities such as Tabuk, Jazan and Hail. Millennium is also abiding by the kingdom’s “Saudization program” with a commitment to local hiring, cultural integration, and partnerships with local businesses, Harley-Fleming said.

💲 Sovereign Circuit

ADIA, the Public Investment Fund and other Gulf sovereign wealth funds are finding it easier to attract and retain personnel as they are increasingly seen as influential dealmakers, data provider Global SWF reports. The PIF employs close to 2,000 people in Riyadh with plans to grow in the U.S., London and Asia, a survey by the firm notes. Despite a reduction in backoffice staff recently,  ADIA has been on a hiring computer experts and quants to set up an in-house “science lab,”  the report says.

Qatar Airways plans to acquire a 25% stake in Australia’s Virgin Australia Airlines from Bain Capital. Terms of the deal were not disclosed.

↪↩ Closing Circuit

👥 Energy Partners: ADNOC Drilling Co. has formed a joint venture with Schlumberger and Patterson-UTI called Turnwell to accelerate its $1.7 billion program in so-called unconventional oil and gas well exploration. ADNOC Drilling will hold a 55% stake in Turnwell.

💰 Metal Makers: Emirates Global Aluminium, the world’s largest producer of premium aluminum, announced the acquisition of a majority stake in the American aluminum recycling company, Spectro Alloys Corp. Terms were not disclosed.

🚰 Water Supply: Bahrain’s Deputy Prime Minister Sheikh Khalid bin Abdullah, inaugurated an $85 million electricity and water distribution station at the Al Hidd Housing Project.

🏢 Small Business: Emirates Development Bank and Abu Dhabi Islamic Bank will work together to support small and medium-sized businesses, or SMEs, through a joint finance guarantee program, with EDB providing 50% of financing for selected sectors including manufacturing, healthcare, and renewables.

⛽ Gas Project: Chinese contractor Jereh Oil & Gas Engineering secured a $316 million contract to provide engineering, procurement, construction, and commissioning services for Bahrain Petroleum Co., focusing on gas facilities in southern Bahrain.

Circuit Chatter

🛍️ Retail Therapy: Qatar is rapidly becoming a top retail destination in the MENA region, leveraging its $330 billion infrastructure investments from the 2022 FIFA World Cup, with new stores, malls and tourist attractions such as the $5.5 billion Simaisma Project, according to London-based consulting firm Knight Frank.

ℹ️ Tourist Attraction: Saudi Arabia generated a 656% rise in international tourists who came to the kingdom for entertainment and holidays in the first seven months of 2024, according to the Ministry of Tourism.

🛩️  Arrivals Terminal: Dubai International Airport raised its 2024 passenger forecast to 93 million, up from 91.8 million, noting that the increase comes in spite of ongoing Middle Eas tensiont.

💸 Bonds Offering: Egypt’s central bank has issued 50 billion Egyptian pounds ($1.1 billion) in treasury bills to manage liquidity and bolster government financing in response to rising inflation.

💳 New Look: aiBANK has rebranded as Bank NXT, which it describes as redefining its role in Egypt’s commercial banking  by providing timely financial solutions while investing in human capital and digital infrastructure.

🌍 Power Circuit

UAE President Sheikh Mohamed bin Zayed approved a $100 million relief package for Lebanon to support the country “through its current challenges,” according to a Presidential Court statement.

Sheikh Khalid bin Mohammed, Crown Prince of Abu Dhabi, began an official visit to Qatar on Tuesday where met with Emir SheikhTamim bin Hamad and a range of Qatari officials. Those accompanying the Prince included Mohamed Alsuwaidi, UAE Minister of Investment; Khaldoon Al Mubarak; Chairman of the Executive Affairs Authority and CEO of Mubadala Investment Co.; Mohamed Al Mubarak, Chairman of the Department of Culture and Tourism; and Saif Ghobash, Secretary General of the Abu Dhabi Executive Council.

Emir of Qatar Sheikh Tamim bin Hamad, held a phone call with Iraqi Prime Minister Mohammed Shia al-Sudani to discuss potential commercial ties between the countries and “maintain stability in the Middle East.”

Sheikh Shakhboot Nahyan, UAE Minister of State for Foreign Affairs, addressed the U.N. General Assembly on Monday during a debate on “Unity and diversity for advancing peace, sustainable development, and human dignity.”

➿ On the Circuit

Naguib Sawiris, Egypt’s second-wealthiest man and Chairperson of Ora Developers Egypt, called on the Central Bank of Egypt at a press conference to reduce the country’s 30% interest rates, which he said prevented Ora from making any profit in the first construction phase of its Zed Sheikh Zayed development in western Cairo.

Alan Coary was appointed Middle East Data Center Lead at London-based consulting firm Turner & Townsend and will be based in Riyadh.

Wael Mahdihas been appointed as Chief Growth Officer for the Middle East and North Africa at Gen Plus Group, a London-based network of PR agencies.

🎶 Culture Circuit

🎞 Oscar Rivals: Arab filmmakers from six countries have submitted entries for the Best International Feature Film competition at the 2025 Academy Awards on March 2. They include Egypt’s “Flight 404, directed by Hani Khalifa; Morocco’s “Everybody Loves Touda,” directed by Nabil Ayouch; Algeria’s  “Algiers,” directed by Chakib Taleb-Bendiab; a collection of 22 Palestinian short films by Gazan filmmakers, entitled “From Ground Zero,” presented by Rashid Masharawi; Jordan’s “My Sweet Land,” directed by Azza Hourani; and Iraq’s “Bagdhad Messi, directed by Sahim Omar Kalifa.

Photo of the Day

Falconers from around the Gulf gathered in Saudi Arabia’s Al-Hammad area this week for the start of hunting season. (Saudi Press Agency)

🗓️ Ahead on The Circuit

Sep. 30-Oct. 2, Dubai, UAE: Future Hospitality Summit. The global conference for leaders in the hospitality industry expands this year at a new location with dedicated space for ESG planning, country pavilions and a larger exhibition area. Madinat Jumeirah. 

Oct. 2, Riyadh: Interview with Fareed Zakaria.  CNN commentator talks about his new book, “Age of Revolutions”  at Riyadh Book Fair with Arab News Editor in Chief Faisal Abbas. Riyadh International Convention & Exhibition Centre.

Oct. 5-6, Abu Dhabi, UAE: Abu Al Abyad Dhow Sailing Race. The race is expected to set off from Abu Al Abyad to the Abu Dhabi Breakwater, attracting dhow owners and elite sailors. Abu Al Abyad Island.

Oct. 14-18, Dubai, UAE: GITEX Global. One of tech’s biggest events, the UAE conference brings companies from around the world to showcase their latest innovations. Dubai World Trade Center.

Oct. 15-17, Dubai, UAE: Aviation Future Week. Conference brings together UAE ministers, senior government officials and leaders from the aviation, aerospace, air freight and other related industries. Museum of the Future.

Oct.22-24, Dubai, UAE: Dubai Helishow. Conference features innovations in hybrid and electric helicopters, AI integration, UAV combat operations, and civil aviation. Skydive Dubai.

Oct. 29-31, Riyadh, Saudi Arabia. Future Investment Initiative Conference, 8th Edition. More than 6,000 global participants registered, including world leaders, policymakers CEOs and investors. King Abdul Aziz International Conference Center.

Nov. 12-13, Abu Dhabi, UAE: CyberQ: Security in the Quantum Era. Conference brings together international experts, policymakers and industry players to discuss challenges of the quantum age of cybersecurity. ADNEC.